KPMG: First experience from application of the amended VAT Act 2013

On 1 January, 2013, the amendment to the VAT Act came into force, bringing with it substantial changes in many areas. Although in January taxpayers were mostly still busy calculating their tax liability for the last period of 2012, the introduction of some of the new rules in practice is emerging as problematic. Here are some of the most notable problem areas:

Liability

Unreliable payer

The amendment to the VAT Act has introduced liability (of a taxable supply recipient) for VAT payment (by the supply provider) in cases where the supply provider has been publically listed as an unreliable payer. The information is to be published in the payers register, available on the tax administration website: http://adisreg.mfcr.cz/cgi-bin/adis/idph/int_dp_prij.cgi?ZPRAC=FDPHI1&poc_dic=2

Payment to a registered account

Under the amended VAT Act, a taxable supply recipient is liable to pay VAT (if not paid by the supply provider) where the payment has been made to an account of the taxable supply provider other than that published by the tax administrator. In this respect, the liability will only apply to payments made after 31 March, 2013. However, individual payers are obliged to notify their tax administrator of the accounts they want published for this purpose by the end of February 2013. The notice may be provided using a special form (http://cds.mfcr.cz/sys/cds/scripts/tiskopisy/tiskopisypdf2013/5111_1.pdf), or by a common letter if more than one account is being declared. If the taxpayer does not inform the tax administrator about which accounts to publish, the tax administrator will publish information on all accounts that it has in its records.

Checking suppliers

The information on payers’ status and accounts should be available on the Czech tax administration website, in the VAT payers register. As the database should allow for repeated remote access, KPMG is currently preparing an application to enable collective checks of multiple payers’ status and bank accounts.